5 Ways To Avoid Foreclosure In Sacramento

No one wants to go through foreclosure, but sometimes it can’t be helped. If you’re struggling to make your mortgage payments, or you’ve already fallen behind, you may be wondering what your options are. If you are facing foreclosure in Sacramento, there are a few things you can do to try and avoid it. We are definitely aware that foreclosure is a stressful and difficult process, but it is possible to get through it if you take the right steps.

1. Sell your house
2. Refinance your mortgage
3. Get a loan modification
4. Do a short sale
5. Deed your property back to the bank

1. Sell Your House 

One of the best ways to avoid foreclosure is to simply sell your house. This may seem like an obvious solution, but many people are reluctant to do this because they don’t want to move or they’re worried about losing money on the sale. However, selling your home before foreclosure begins is always going to be better than going through with a foreclosure. Not only will it help improve your credit score, but you may also be able to negotiate with your lender to keep some of the proceeds from the sale so that you can use it as a down payment on another home. 

2. Refinance Your Mortgage 

If you’re caught up on your mortgage payments but you’re worried about falling behind in the future, refinancing may be a good option for you. By refinancing, you can lock in a lower interest rate which will lower your monthly payments and make it easier for you to stay current on your mortgage. You may also be able to extend the term of your loan which will further lower your payments. Just be aware that by refinancing, you could end up paying more interest over the life of the loan so it’s important to weigh all of your options carefully before deciding if this is the right move for you. 

3. Get A Loan Modification 

If you’re already behind on your mortgage payments, one way to avoid foreclosure is to apply for a loan modification with your lender. A loan modification is when your lender agrees to change the terms of your loan in order to make it more affordable for you. This could mean extending the term of the loan, lowering the interest rate, or even forbearing some of the unpaid principal balance. If you think you might qualify for a loan modification, reach out to your lender and have a conversation about whether or not this is something they would be willing to do for you. 

4. Do A Short Sale 

If selling your house outright isn’t an option for you but you still need to get rid of it quickly, doing a short sale may be an option worth considering. A short sale is when you sell your house for less than what’s owed on the mortgage and use that money to pay off the balance of the loan. The downside of doing a short sale is that it will still negatively impact your credit score, but it will probably not damage it as much as completing a foreclosure would. Additionally, if you’re able to negotiate with your lender, they may agree not to pursue a deficiency judgment against you for any unpaid balance after the short sale is completed which could save you thousands of dollars down the road. 

5.. Deed Your Property Back To The Bank 

In some cases, it may make more sense for you to just give up ownership of the property altogether and deed it back over to the bank rather than trying to hold on and hope that things turn around financially for you down the road. This process is known as a deed in lieu of foreclosure and while it will still negatively affect your credit score like any other type of foreclosure would, deed in lieu foreclosures are generally not as damaging as traditional foreclosures because they don’t go through all of the legal hoops that traditional foreclosures do. Plus, if you voluntarily deed over ownership of the property, chances are good that your lender won’t pursue a deficiency judgment against you which could save you thousands in the long run. Before you decide to deed over ownership of the property, however, make sure that your lender is willing to work with you because if they’re not, the process can get cumbersome quickly.

Foreclosure is never anyone’s first choice, but sometimes it seems like there’s no avoiding it. If you’re facing foreclosure in Sacramento, there are several options available  that can help you avoid it entirely. Take some time to consider each one carefully before deciding which path is right for you. Working with a real estate professional can help make the process much less overwhelming, so if you’ve been contemplating, don’t hesitate to reach out today!